Fundamental Outlook for Canadian Dollar: Bearish
- Canada plans stimulus plan to boost economy
- DailyFX Analysts express their views on the Canadian Dollar
Year-end trading in the Canadian dollar will either be completely uneventful or incredibly volatile. Thinned trading desks at major global banks means that forex market conditions will be especially illiquid. Such conditions can exacerbate price moves or simply indicate that few traders are interested in holding positions. It will be subsequently be important to take illiquidity into account when watching reactions to Thursday’s Canadian Gross Domestic Product report. Economists predict that Canada’s economy fell into economic recession through the fourth quarter of 2008, and October’s result is forecast to show a GDP decline of 0.3 percent. Barring a truly sensational surprise, outlook for Canadian economic growth will likely remain bearish. The highly export-dependent economy remains highly susceptible to a drop in global demand—especially as natural resources comprise 65 percent of all exports. Thus traders are somewhat unlikely to react strongly to the release.
Watch for any other unexpected developments out of either Canada or the US—especially as conditions remain ripe for fast-paced illiquid moves. - DR
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